Stride Posts Record Quarterly Results

RESTON, Va., Jan. 28, 2025 (GLOBE NEWSWIRE) -- Stride, Inc. (NYSE:LRN), one of the nation's most successful technology-based education companies, today announced its results for the second fiscal quarter ended December 31, 2024.

Second Quarter Fiscal 2025 Highlights Compared to 2024

• Revenue of $587.2 million, compared with $504.9 million.
• Income from operations of $125.1 million, compared with $84.3 million.
• Net income of $96.4 million, compared with $66.8 million.
• Diluted net income per share of $2.03, compared with $1.54.
• Adjusted operating income of $135.6 million, compared with $94.9 million. (1)
• Adjusted EBITDA of $160.4 million, compared with $118.3 million. (1)

Second Quarter Fiscal 2025 Summary Financial Metrics

	Three Months Ended December 31,						Change 2024/2023
	2024			2023			$			%
	(In thousands, except percentages and per share data)
Revenues	$	587,211		$	504,868		$	82,343		16.3	%
Income from operations		125,100			84,289			40,811		48.4	%
Adjusted operating income (1)		135,570			94,873			40,697		42.9	%
Net income		96,393			66,836			29,557		44.2	%
Net income per share, diluted		2.03			1.54			0.49		31.8	%
EBITDA (1)		152,495			110,752			41,743		37.7	%
Adjusted EBITDA (1)		160,420			118,348			42,072		35.5	%

(1)

To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted operating income (loss), EBITDA and adjusted EBITDA. Management believes that these additional metrics provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.

Six Month Fiscal 2025 Highlights Compared to 2024

• Revenue of $1,138.3 million, compared with $985.0 million.
• Income from operations of $172.4 million, compared with $87.6 million.
• Net income of $137.3 million, compared with $71.7 million.
• Diluted net income per share of $2.93, compared with $1.66.
• Adjusted operating income of $193.9 million, compared with $109.6 million. (1)
• Adjusted EBITDA of $244.3 million, compared with $158.1 million. (1)

Six Month Fiscal 2025 Summary Financial Metrics

	Six Months Ended December 31,							Change 2024/2023
	2024			2023				$		%
	(In thousands, except percentages and per share data)
Revenues	$	1,138,295			985,049			153,246		15.6	%
Income from operations		172,444			87,609			84,835		96.8	%
Adjusted operating income (1)		193,930			109,634			84,296		76.9	%
Net income		137,275			71,714			65,561		91.4	%
Net income per share, diluted		2.93			1.66			1.27		76.5	%
EBITDA (1)		227,973			142,089			85,884		60.4	%
Adjusted EBITDA (1)		244,347			158,111			86,236		54.5	%

(1)

To supplement our financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we also present non-GAAP financial measures including adjusted operating income (loss), EBITDA and adjusted EBITDA. Management believes that these additional metrics provide useful information to investors relating to our financial performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.

Revenue Data

		Three Months Ended													Six Months Ended
		December 31,						Change 2024 / 2023							December 31,						Change 2024 / 2023
		2024			2023			$				%			2024			2023			$				%
		(In thousands, except percentages)
General Education		$	354,315		$	313,902		$	40,413			12.9	%		$	683,722			613,241		$	70,481			11.5	%
Career Learning
Middle - High School			213,079			165,080			47,999			29.1	%			411,965			316,053			95,912			30.3	%
Adult			19,817			25,886			(6,069	)		(23.4	%)			42,608			55,755			(13,147	)		(23.6	%)
Total Career Learning			232,896			190,966			41,930			22.0	%			454,573			371,808			82,765			22.3	%
Total Revenues		$	587,211		$	504,868		$	82,343			16.3	%		$	1,138,295			985,049		$	153,246			15.6	%

Enrollment and Revenue Per Enrollment Data

Second quarter enrollments averaged 230.6K, up 19.4% compared to 193.1K enrollments in the second quarter of fiscal year 2024. Of the total average enrollments, 94.8K were Career Learning enrollments, up 30.9% compared to 72.4K Career Learning enrollments in the second quarter of fiscal 2024.

Enrollments only include those students in full service public or private programs where Stride provides a combination of curriculum, technology, and instructional and support services, inclusive of administrative support and may include enrollments for which Stride receives no public funding or revenue. Stride does not report enrollments for our Adult Learning business.

Revenue per enrollment for the second quarter was $2,395, flat compared to $2,396 in the second quarter of fiscal year 2024. General Education revenue per enrollment was $2,497, up 1.3%, and Career Learning revenue per enrollment was $2,248, down 1.4%, compared to the second quarter of fiscal year 2024, respectively. If the mix of enrollments changes, our revenues will be impacted to the extent the average revenues per enrollments are significantly different.

Cash Flow and Capital Allocation

As of December 31, 2024, the Company's cash and cash equivalents and marketable securities totaled $738.1 million, compared with $714.2 million reported at June 30, 2024.

Capital expenditures for the three months ended December 31, 2024 were $14.8 million, compared to $12.7 million in the three months ended December 31, 2023, and were comprised of $0.5 million of property and equipment, $9.8 million of capitalized software development and $4.5 million of capitalized curriculum development.

Fiscal Year 2025 Outlook

The Company is raising its revenue and adjusted operating forecast for the full fiscal year 2025:

• Revenue in the range of $2.320 billion to $2.355 billion.
• Capital expenditures in the range of $60 million to $65 million. Note that capital expenditures include the purchase of property and equipment, and capitalized software and curriculum development costs as defined on our Statement of Cash Flows.
• Effective tax rate of 24% to 26%.
• Adjusted operating income in the range of $430 million to $450 million. (1)

The Company is forecasting the following for the third quarter of fiscal year 2025:

• Revenue in the range of $585 million to $600 million.
• Capital expenditures in the range of $15 million to $17 million. Note that capital expenditures include the purchase of property and equipment, and capitalized software and curriculum development costs as defined on our Statement of Cash Flows.
• Adjusted operating income in the range of $130 million to $140 million. (1)
  
  

(1)

In addition to providing an outlook for revenue and capital expenditures, adjusted operating income is provided as a supplemental non-GAAP financial measure as management believes that it provides useful information to our investors. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below. Please also see Special Note on Forward-Looking Statements below.

Conference Call

The Company will discuss its second quarter fiscal year 2025 financial results during a conference call scheduled for Tuesday, January 28, 2025 at 5:00 p.m. eastern time (ET).

A live webcast of the call will be available at https://events.q4inc.com/attendee/534139423. To participate in the live call, investors and analysts should dial (800) 715-9871 (domestic) or +1 (646) 307-1963 (international) and provide the conference ID number 8901384. Please access the website at least 15 minutes prior to the start of the call.

A replay of the call will be posted at https://events.q4inc.com/attendee/534139423 as soon as it is available.

About Stride Inc.

Stride Inc. (NYSE:LRN) is redefining lifelong learning with innovative, high-quality education solutions. Serving learners in primary, secondary, and postsecondary settings, Stride provides a wide range of services including K-12 education, career learning, professional skills training, and talent development. Stride reaches learners in all 50 states and over 100 countries. Learn more at stridelearning.com.

Investor Contact

Timothy Casey

Vice President, Investor Relations

Stride, Inc.

[email protected]

Special Note on Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this press release are forward-looking statements. We have tried, whenever possible, to identify these forward-looking statements using words such as "anticipates," "believes," "estimates," "continues," "likely," "may," "opportunity," "potential," "projects," "will," "will be," "expects," "plans," "intends" and similar expressions to identify forward-looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve a sufficient level of new enrollments to sustain our business model; limitations of the enrollment data we present, which may not fully capture trends in the performance of our business; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; failure of the schools we serve or us to comply with federal, state and local regulations, resulting in a loss of funding, an obligation to repay funds previously received, or contractual remedies; governmental investigations that could result in fines, penalties, settlements, or injunctive relief; declines or variations in academic performance outcomes of the students and schools we serve as curriculum standards, testing programs and state accountability metrics evolve; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and/or in any school in which we operate; legal and regulatory challenges from opponents of virtual public education or for-profit education companies; changes in national and local economic and business conditions and other factors, such as natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments; discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts, or a reduction in the scope of services, with schools; failure to develop the Career Learning business; entry of new competitors with superior technologies and lower prices; unsuccessful integration of mergers, acquisitions and joint ventures; failure to further develop, maintain and enhance our technology, products, services and brands; inadequate recruiting, training and retention of effective teachers and employees; infringement of our intellectual property; disruptions to our Internet-based learning and delivery systems, including, but not limited to, our data storage systems and third-party cloud systems and facilities, resulting from cybersecurity attacks; misuse or unauthorized disclosure of student and personal data; failure to prevent or mitigate a cybersecurity incident that affects our systems; and risks related to artificial intelligence; and other risks and uncertainties associated with our business described in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this press release is as of today's date, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

Financial Statements

The financial statements set forth below are not the complete set of Stride, Inc.'s financial statements for the three and six months ended December 31, 2024 and are presented below without footnotes. Readers are encouraged to obtain and carefully review Stride Inc.'s Quarterly Report on Form 10-Q for the three and six months ended December 31, 2024, including all financial statements contained therein and the footnotes thereto, filed with the SEC, which may be retrieved from the SEC's website at www.sec.gov or from Stride Inc.'s website at www.stridelearning.com.

STRIDE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2024				2023				2024				2023
		(In thousands except share and per share data)
Revenues		$	587,211			$	504,868			$	1,138,295			$	985,049
Instructional costs and services			347,353				303,694				682,584				610,987
Gross margin			239,858				201,174				455,711				374,062
Selling, general, and administrative expenses			114,758				116,885				283,267				286,453
Income from operations			125,100				84,289				172,444				87,609
Interest expense, net			(2,670	)			(2,022	)			(5,023	)			(4,090	)
Other income, net			7,330				6,538				16,108				11,703
Income before income taxes and income (loss) from equity method investments			129,760				88,805				183,529				95,222
Income tax expense			(33,361	)			(22,190	)			(44,638	)			(23,726	)
Income (loss) from equity method investments			(6	)			221				(1,616	)			218
Net income attributable to common stockholders		$	96,393			$	66,836			$	137,275			$	71,714
Net income attributable to common stockholders per share:
Basic		$	2.24			$	1.57			$	3.20			$	1.69
Diluted		$	2.03			$	1.54			$	2.93			$	1.66
Weighted average shares used in computing per share amounts:
Basic			43,017,190				42,561,035				42,942,750				42,530,523
Diluted			47,462,688				43,463,763				46,905,355				43,214,119

STRIDE, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
		December 31,				June 30,
		2024				2024
						(audited)
		(In thousands except share and per share data)
ASSETS
Current assets
Cash and cash equivalents		$	515,049			$	500,614
Accounts receivable, net of allowance of $35,517 and $31,298			582,548				472,754
Inventories, net			20,707				36,748
Prepaid expenses			51,367				29,164
Marketable securities			202,447				191,672
Other current assets			16,361				14,494
Total current assets			1,388,479				1,245,446
Operating lease right-of-use assets, net			48,563				54,503
Property and equipment, net			84,685				50,856
Capitalized software, net			77,299				81,952
Capitalized curriculum development costs, net			53,759				53,232
Intangible assets, net			55,170				60,282
Goodwill			246,676				246,676
Deferred tax asset			—				7,200
Deposits and other assets			116,150				120,318
Total assets		$	2,070,781			$	1,920,465
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	30,896			$	40,970
Accrued liabilities			82,664				60,796
Accrued compensation and benefits			44,508				64,878
Deferred revenue			16,797				35,742
Current portion of finance lease liability			43,212				29,146
Current portion of operating lease liability			12,583				12,748
Total current liabilities			230,660				244,280
Long-term finance lease liability			50,731				26,452
Long-term operating lease liability			39,202				45,192
Long-term debt			415,522				414,675
Deferred tax liability			470				—
Other long-term liabilities			16,091				13,841
Total liabilities			752,676				744,440
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $0.0001; 10,000,000 shares authorized; zero shares issued or outstanding			—				—
Common stock, par value $0.0001; 100,000,000 shares authorized; 48,890,343 and 48,576,164 shares issued; and 43,555,600 and 43,241,421 shares outstanding, respectively			4				4
Additional paid-in capital			724,839				720,033
Accumulated other comprehensive loss			(43	)			(42	)
Retained earnings			695,787				558,512
Treasury stock of 5,334,743 shares at cost			(102,482	)			(102,482	)
Total stockholders' equity			1,318,105				1,176,025
Total liabilities and stockholders' equity		$	2,070,781			$	1,920,465

STRIDE, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Six Months Ended
		December 31,
		2024				2023
		(In thousands)
Cash flows from operating activities
Net income		$	137,275			$	71,714
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense			55,529				54,480
Stock-based compensation expense			16,374				16,022
Deferred income taxes			9,289				425
Provision for credit losses			9,624				15,332
Amortization of fees on debt			847				834
Noncash operating lease expense			6,222				7,913
Other			1,869				1,430
Changes in assets and liabilities:
Accounts receivable			(119,416	)			(61,247	)
Inventories, prepaid expenses, deposits and other current and long-term assets			(4,084	)			883
Accounts payable			(8,983	)			(15,994	)
Accrued liabilities			20,248				(20,987	)
Accrued compensation and benefits			(20,303	)			(14,340	)
Operating lease liability			(6,437	)			(8,587	)
Deferred revenue and other liabilities			(16,694	)			(9,849	)
Net cash provided by operating activities			81,360				38,029
Cash flows from investing activities
Purchase of property and equipment			(1,153	)			(1,703	)
Capitalized software development costs			(18,601	)			(18,402	)
Capitalized curriculum development costs			(9,841	)			(8,731	)
Other acquisitions, loans and investments, net of distributions			(950	)			(275	)
Proceeds from the maturity of marketable securities			140,740				80,361
Purchases of marketable securities			(145,865	)			(120,047	)
Net cash used in investing activities			(35,670	)			(68,797	)
Cash flows from financing activities
Repayments on finance lease obligations			(16,714	)			(22,491	)
Repurchase of restricted stock for income tax withholding			(11,963	)			(3,161	)
Net cash used in financing activities			(28,677	)			(25,652	)
Net change in cash, cash equivalents and restricted cash			17,013				(56,420	)
Cash, cash equivalents and restricted cash, beginning of period			500,614				410,807
Cash, cash equivalents and restricted cash, end of period		$	517,627			$	354,387
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st:
Cash and cash equivalents		$	515,049			$	354,387
Deposits and other assets (restricted cash)			2,578				—
Total cash, cash equivalents and restricted cash		$	517,627			$	354,387

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP, we have presented adjusted operating income (loss), EBITDA, and adjusted EBITDA, which are not presented in accordance with GAAP.

• Adjusted operating income (loss) is defined as income (loss) from operations as adjusted for stock-based compensation and the amortization of intangible assets.
• EBITDA is defined as income (loss) from operations as adjusted for depreciation and amortization.
• Adjusted EBITDA is defined as income (loss) from operations as adjusted for stock-based compensation and depreciation and amortization.
• Adjusted EBITDA and adjusted operating income (loss) exclude stock-based compensation, which consists of expenses for stock options, restricted stock, restricted stock units, and performance stock units.

Management believes that the presentation of these non-GAAP financial measures provides useful information to investors relating to our financial performance. Adjusted operating income (loss) and Adjusted EBITDA remove stock-based compensation, which is a non-cash charge that varies based on market volatility and the terms and conditions of the awards. EBITDA and Adjusted EBITDA remove depreciation and amortization, which can vary depending upon accounting methods and the book value of assets. EBITDA and Adjusted EBITDA provide a measure of corporate performance exclusive of capital structure and the method by which assets were acquired.

Our management uses these non-GAAP financial measures:

• as additional measures of operating performance because they assist us in comparing our performance on a consistent basis; and
• in presentations to the members of our Board of Directors to enable our Board to review the same measures used by management to compare our current operating results with corresponding prior periods.

Other companies may define these non-GAAP financial measures differently and, as a result, our use of these non-GAAP financial measures may not be directly comparable to similar non-GAAP financial measures used by other companies. Although we use these non-GAAP financial measures to assess the performance of our business, the use of non-GAAP financial measures is limited as they include and/or do not include certain items not included and/or included in the most directly comparable GAAP financial measure.

These non-GAAP financial measures should be considered in addition to, and not as a substitute for, revenues, income (loss) from operations, net income (loss) and net income (loss) per share or other related financial information prepared in accordance with GAAP. Adjusted EBITDA is not intended to be a measure of liquidity. You are cautioned not to place undue reliance on these non-GAAP financial measures.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.

Second Quarter Fiscal Year 2025

Reconciliation of Income from Operations to Adjusted Operating Income

	Three Months Ended								Six Months Ended
	December 31,								December 31,
		2024				2023				2024				2023
	(In thousands)
Income from operations	$	125,100			$	84,289			$	172,444			$	87,609
Amortization of intangible assets		2,545				2,988				5,112				6,003
Stock-based compensation expense		7,925				7,596				16,374				16,022
Adjusted operating income		135,570				94,873				193,930				109,634

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

	Three Months Ended December 31,								Six Months Ended December 31,
		2024				2023				2024				2023
	(In thousands)
Net income	$	96,393			$	66,836			$	137,275			$	71,714
Interest expense, net		2,670				2,022				5,023				4,090
Other income, net		(7,330	)			(6,538	)			(16,108	)			(11,703	)
Income tax expense		33,361				22,190				44,638				23,726
(Income) loss from equity method investments		6				(221	)			1,616				(218	)
Depreciation and amortization		27,395				26,463				55,529				54,480
EBITDA		152,495				110,752				227,973				142,089
Stock-based compensation expense		7,925				7,596				16,374				16,022
Adjusted EBITDA	$	160,420			$	118,348			$	244,347			$	158,111

Fiscal Year 2025 Outlook

Reconciliation of Income from Operations to Adjusted Operating Income (unaudited)

	Three Months Ended March 31, 2025								Year Ended June 30, 2025
	Low				High				Low				High
	(In millions)
Income from operations	$	119.8			$	127.3			$	387.5			$	402.5
Stock-based compensation expense		8.0				10.0				33.0				37.0
Amortization of intangible assets		2.2				2.7				9.5				10.5
Adjusted operating income	$	130.0			$	140.0			$	430.0			$	450.0